Korindo

A South Korean company which has been logging and planting oil palm in neighbouring Boven Digoel since the 1990s has started planting oil palm in Merauke too, cheating local people out of their land.

Last Updated 02/08/2013

Company Description: Korindo is a Korean company that has been involved in Indonesia since 1969, initially in the logging business in Kalimantan. It maintains large forestry plantations in Kalimantan but has diversified into other areas, such as heavy industry (for example constructing wind turbines and buses), finance and real estate.

Owned by: Korindo is a private company. The chairman Seung Eun-Ho, who is also chair of Korean company Donghwa, is Korindo’s largest shareholder.1

Plans in Merauke: Korindo has had logging permits in Boven Digul regency, just to the north of Merauke since 1993 and an oil palm plantation since 1998, and is now looking to develop new areas to the south. Several different companies linked to Korindo are developing plantations.

One subsidiary company, PT Dongin Prabhawa, is the most advanced – it has commenced work on a 40,000 hectare oil palm plantation. After obtaining all the required permissions in August 2011 Korindo announced plans to import seedlings from Papua New Guinea and proceed with planting 5000 hectares each year.2

Oil palm is also being grown in the north-eastern part of Merauke regency, and Korindo is involved here too. However, Korindo’s role is not entirely clear. There are three active plantation operators: PT Bio Inti Agrindo, PT Papua Agro Lestari, and PT Berkat Citra Abadi. PT Bio Inti Agrindo is known to be owned by another Korean company, Daewoo International, which it is believed also runs PT Papua Agro Lestari. It is likely that Korindo had some hand in setting up these companies and passing them on to Daewoo3. Recent reports from the area indicate that PT Berkat Citra Abadi (which definitely used to be owned by Korindo) is also being run from the same office. We still do not know the exact nature of the relationship between Korindo and Daewoo, and so cannot say for certain which company currently owns PT Berkat Citra Abadi.

Reports have indicated that the oil palm being grown by Korindo may be destined for agrofuel, rather than food.4

A smaller concession near Merauke city of 14,000 hectares for oil palm has been given to another Korindo company, PT Indosawit Lestari. Two more Korindo subsidiaries, PT Balikpapan Forest Industries and PT Inocin Kalimantan (sometimes Inocin Abadi), are included on the list of investors supplied by the Merauke Promotion and Investment Agency. These two companies are planning to be involved in wood plantations rather than oil palm. However, as of July 2013, there had been no signs of activities from these three companies in the previous two years.

Stories from the ground: By the start of June 2011, PT Dongin Prabhawa was reported to have felled about 5000 hectares of forest, and in December 2011 there was a report that 7000 hectares had been felled5. They paid the community of Nakias village 54 million Rupiah [$6000] as compensation for the wood that was on their land but this was the company’s own estimation of the value of the wood. The people were not allowed to see how the company calculated the amount, and it seems that they can not have been compensated for the increased amounts for valuable timber species such as merbau at the rate stipulated by the government.6 By this calculation, a cubic metre of wood is valued at the same price as a bottle of mineral water or a kilo of rice bought locally. What’s more, this sum does not include any compensation for the loss of their land, and leaves them without any means of meeting their basic needs.

In January 2012 the local Bupati stepped in to try to mediate an agreement between local people and PT Dongin Prabhawa, but had to report that he did not know when an agreement could be reached because the people were still determined to refuse the company access to their village’s land.7

In May 2012, it was reported that four villages (Nakias, Tagaepe, Salamepe and Mbanomepe) were unwilling to sell their land for less than 100 million Rupiah (US$ 10 million), presumably knowing the company would not be prepared to pay such a sum. Since that time information has been sparse from this remote location. In July 2013 it was believed that Tagaepe village was still holding out and refusing to sell, but it is likely that the other villages have bowed to the company’s pressure.8

In PT Berkat Citra Abadi’s concession area, local residents complained in August 2011 that the company had also been buying under-priced land from the communities, giving them only 70,000 Rupiah [$8] per hectare.9

By July 2013, some clans were still refusing to sell their land, but also PT Berkat Citra Abadi had also started clearing land. In December 2012, local people employed by the company complained that they were only paid 62,000 Rupiah a day, a very low wage when living costs in rural Papua are so expensive.10

Other Conflicts around West Papua and Indonesia: Korindo has been operating in Papua since 1993, when the company obtained a huge 700,000 hectare logging concession and set up a plywood factory. Korindo has also operated one of the largest up-and-running oil palm plantations in Boven Digul Regency, bordering on Merauke, since 1998.

The experience of Papuans around Korindo’s plantations in Boven Digul demonstrates much of what is feared to happen in neighbouring Merauke. Compensation which has been paid has been as low as $40-50 per family, and villages which have tried to refuse to let their land be logged have not been successful. In addition, conflict has arisen within and between clans over who owns land when compensation has been paid. Furthermore, only around 10% of Korindo’s workforce are Papuan, a source of further resentment.11 In 2007 there were clashes between local people and company employees, where one non-Papuan employee was killed and four company trucks burnt.12

An investigation by Justice, Peace and Integration Creation (JPIC) in 2009 has revealed Korindo’s links with the military.13 They found that Korindo’s head of security was a Korean citizen, and his deputy was a serving member of the army. This was a source of concern for local people, as the army’s Kostrad forces had previously intimidated, tortured and even killed local people, including one of Korindo’s employees, Liborius Oka, in 2005. They also found that there were twelve outposts from various units, Kopassus, Kostrad and Koramil, within Korindo’s concession area. Members of the military were accused of selling illegal alcohol and organising gambling in the area. A 2004 investigation by Kontras14 found that as well as their private businesses trading in drink and drugs and selling items from the forest such as crocodile skin, birds-of-paradise and a medicinal plant called gambier, members of the military were routinely paid a monthly sum by Korindo for their security role.

Korindo’s environmental record in Kalimantan has also been criticised. In 2004, a Greenpeace report accused Korindo of widespread illegal logging, including inside the Tanjung Puting National Park15

International links:Plywood from Korindo’s factories is marketed worldwide. In Europe the main dealer was a Belgian company named Fepco. Other divisions of the Korindo Group have offices in the USA and Western Europe.